The Coca-Cola company has operations in more than 140 countries and generates more that 55 percent of its profits from its overseas operations. Coca-Cola’s annual profits are, therefore, more stable than those of a firm that focuses upon the U.S. market alone. Coca-Cola is engaging in _____.

a. a joint venture
b. an exchange rate movements
c. diversification
d. a merger
e. importing

Diversification is a risk strategy, employ by businesses to strengthened its revenue base by entering into a new line of business, markets, products, services etc . It allows the company have other sources of revenue generation rather than just a source.

As a company grow, there would be opportunities for diversification in terms of adding new markets, customers, products etc. The reason is to enable the company have additional revenue should the source of initial revenue cease due to either competition or harsh economic conditions.

Example of diversification is adding of a new line of vehicle like heavy trucks by a car manufacturing company.

andromache andromache · Answer 2 · 2022-04-05T14:22:40+02:00

Since Coca-Cola’s annual profits are, therefore, more stable so it should be engaged in option C. diversification.

What is diversification?

It is the risk strategy that should be employed by the business for stronger the base of revenue via entering into the new business line, markets, products, and the services. It permits the company to have the other source instead focus on only one source.

So based on this, we can conclude that Since Coca-Cola’s annual profits are, therefore, more stable so it should be engaged in option C. diversification.

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